Long-term investors investors should not invest for political reasons.
That’s one of the things Zachary Curry, President and portfolio manager at Davis Rea Investment Counsel, told me during a conversation this week.
But there will be certain stocks that will benefit with Joe Biden as President.
Investors looking to put some money to work and target certain companies that may benefit from Biden’S victory may want to isolate a few stocks.
To help us to do that we turn to Kiplinger, the 100 year-old business and personal finance media company, which has chosen 10 stocks that we’ve narrowed down to six.
Here are the hi-lights from Kiplinger’s report:
Brookfield Renewable Partners (TSX:BEP.UN;NYSE:BEP)
We’ll start with Brookfield Renewable Partners LP, which owns a portfolio of wind, solar, hydroelectric and other green-energy properties.
While Biden is less focused on environmental issues than many of his Democratic peers, environmentalism and sustainability are a big part of his platform. This quote is from Biden’s website:
“From coastal towns to rural farms to urban centers, climate change poses an existential threat – not just to our environment, but to our health, our communities, our national security, and our economic well-being.”
Biden believes the Green New Deal is a crucial framework for meeting the climate challenges we face.
Biden might have to negotiate with a Republican Senate, and it’s extremely unlikely he’d have a strong enough mandate to force through the Green New Deal in its entirety.
In fact, “even if Biden wins the White House and Democrats lead Congress, the combined opposition from the party’s moderate wing and from Republicans should make it difficult to push through transformational fiscal programs, such as the Green New Deal and Medicare for All,” writes the Wells Fargo Investment Institute.
But it’s still safe to assume that green energy and infrastructure will be a priority. That makes Brookfield Renewable Partners LP, the 60%-owned renewable-energy affiliate of Brookfield Asset Management (TSX;MAB.A;NYSE:BAM), one of the best stocks to buy for a Joe Biden presidency.
The U.S. government isn’t exactly going to write Brookfield a check. But a rising tide lifts all boats, and increased spending in this space is likely to boost Brookfield’s bottom line.
Tesla is a natural beneficiary of a Biden presidency.
One of Biden’s stated objectives is to make the United States the leader in electric vehicle production and acceptance. And while Tesla isn’t the only game in town for electric vehicles, it’s clearly the largest and best-known pure play.
Of course, it’s not like Tesla needs Joe Biden to generate interest in its cars. Tesla is doing more than fine under a distinctly non-green Trump administration.
CEO Elon Musk generates more press than most presidents, and TSLA shares have been on fire.
Even after a considerable pullback, shares are up nearly 800 per cent in the last year, and Tesla is now the most valuable auto company in the world.
Is this an unsustainable bubble? It might be. But we have to say “might” because the shares have appeared to be expensive for years by traditional metrics and yet continued to run higher. So, regardless of who becomes the next president, you might want to tread carefully in Tesla stock.
But a Biden administration would certainly push electric vehicles, and that can only help Tesla’s bottom line.
Workhorse Group (NASDAQ:WKHS)
Biden might be good for several electric vehicle stocks. That’s why you might want to also consider the shares of Workhorse Group, which not only makes EVs, but electric delivery drones too.
Workhorse has a little bit of history, with roots going back to 1998. Also, its focus isn’t consumer vehicles, but delivery vans. WKHS originally started by converting vans made by other manufacturers but transitioned to making its own original models in 2015 following a merger.
The potential here is obvious. The delivery business is booming during the pandemic, and that’s not likely to change once life gets back to normal. Already, Workhorse counts United Parcel Service and Ryder System among its customers.
And a Biden victory could further smooth the road ahead for WKHS. Prodding and subsidies from a Biden administration would likely encourage companies to upgrade their trucking fleets to electric models.
This sector would have strong tailwinds at its back with a green-oriented Democrat in the White House.
Martin Marietta Materials (NYSE:MLM)
A key plank of Joe Biden’s platform is his “Build Back Better” plan, which includes pledges to “mobilize American manufacturing” and “build a modern infrastructure.”
Biden might have to negotiate with a Republican Senate, but he’s unlikely to get a lot of pushback on these particular issues. Both parties at least pay lip service to the need for a manufacturing renaissance and for investments in infrastructure.
“Infrastructure improvement and supply-chain reshoring of health care goods and other items deemed critical to national security likely will be pushed either by a split government or one led by the Democrats,” according to analysts at WFII.
Martin Marietta is a building materials company that specializes in the materials used in large construction projects. Among other things, it makes crushed sand and gravel products, ready-mixed concrete and asphalt, and paving products and services.
A Biden win should help to speed the infrastructure spending along, making MLM one of the best stocks to buy for a new administration.
UnitedHealth Group (NYSE:UNH)
Joe Biden broke rank with many of his fellow Democrats by stopping short of promising “Medicare for all” or any sort of single-payer healthcare system.
Instead, Biden has promised to provide a “Medicare-like” government option for health plans and to make private-sector plans more affordable and less complex.
The last several presidents certainly tried and failed to “fix” healthcare and it’s still an expensive and complicated mess. Regardless, a Biden win would be bullish for health insurers like UnitedHealth Group.
United Healthcare is particularly well placed because it specializes in Medicare supplemental plans. If Biden is successfully in providing a Medicare-type solution, there will be enormous demand for supplemental plans.
“With respect to Joe Biden’s Medicare expansion proposal, it’s estimated that nearly 23 million individuals would be newly eligible for Medicare,” according to Credit Suisse analysts.
Healthcare still is a political minefield, so be careful investing in the sector. But Biden’s win could create a long runway for UNH.
Realty Income (NYSE:O)
Real estate investment trusts (REITs) were an unintended casualty of the 2017 Tax Cuts and Jobs Act.
Trump’s signature tax reform lowered the corporate tax rate from 35% to 21%, which was great for traditional corporations.
But it made special tax shelters like REITs less attractive by comparison. REITs are not required to pay federal taxes so long as they distribute at least 90% of their profits as dividends.
Joe Biden’s tax plan would raise corporate taxes back to 28% and would more aggressively tax foreign income. All of this bodes poorly for the stock market.
But it wouldn’t be such a bad thing for REITs. Their special tax status might actually be appreciated again.
One REIT to consider is Realty Income. Although it specializes in retail properties, most of its portfolio – pharmacies, dollar stores, convenience stores, big-box retailers – is relatively COVID-proof.
Realty Income a conservative REIT with a long track record of rewarding its shareholders. The company has paid 600 consecutive monthly dividends and has actually raised its dividend for 91 consecutive quarters.
Shares are down by more than 25 per cent from their recent highs, which has elevated the yield well north of four per cent. A combination of receding COVID fears and a stricter tax regime might be just the right mix to send shares even higher.
Image source: www.cfr.org
Related stories: How Violent Protests Could Tip U.S. Election